COMMISSIONER OF INCOME TAX Vs. KIRANA TRADERS

JUDGEMENT

(1.) THIS is a reference under section 256(1) of the Income-tax Act, 1961. The Tribunal has referred the following question for our opinion :

(2.) THE assessee-firm had an instrument of partnership dated October 23, 1966, with six partners. One of them, namely, N. P. Lakshmaiah, died on March 17, 1978. A fresh deed of partnership was executed on March 21, 1978, specifically stating that it should come into effect from April 1, 1978, so much so the firm did not have a deed of partnership between March 18, 1978, and March 31, 1978. THE Income-tax Officer, however, granted registration to the firm for the assessment year 1978-79. But later he cancelled the registration under section 186(1) on the ground that the accounts were continued even after the death of the partner although there was no deed of partnership for the period from March 18, 1978, to March 31, 1978.

(3.) THE answer to the question turns on the scope of section 186(1) of the Income-tax Act, 1961, although Mr. Srinivasan, for the Revenue, urged that the cancellation of registration could also be supported under section 154(1) of the Income-tax Act. Counsel submitted that though the Income-tax Officer did not specifically refer to section 154(1) in his order, so long as that source of power is not disputed, the order of cancellation should not be invalidated when it could be otherwise sustained.